Decision Making Essay

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A Lexicon of Decision Making

Introduction

A decision is an allocation of resources. It can be likened to writing a check and delivering it to the payee. It is irrevocable, except that a new decision may reverse it. In the same way that a check is signed by the account owner, a decision is made by

the decision maker. The decision maker is one who has authority over the resources being allocated. Presumably, he (or she) makes the decision in order to further some

objective, which is what he hopes to achieve by allocating the resources.

Key distinction: decision vs. objective
Example: To accelerate an R&D program is an objective, not a decision. To allocate the funds in an effort to accelerate the program is a decision.
Why it’s important: The decision might not succeed in achieving the objective. One might spend the funds and yet, for any number of reasons, achieve no acceleration at all.

The decision maker will make decisions consistent with his values, which are those things that are important to him, especially those that are relevant to this decision. A common value is economic, according to which the decision maker will attempt to increase his wealth. Others might be personal, such as happiness or security, or social, such as fairness.

The decision maker might set a goal for his decision, which is a specific degree of satisfaction of a given objective. For example, the objective of the decision might be to increase wealth, and the goal might be to make a million dollars.

A decision maker might employ decision analysis, which is a structured way of thinking about how the action taken in the current decision would lead to a result. In doing this, one distinguishes three features of the situation: the decision to be made, the chance and unknown events which can affect the result, and the result itself. Decision analysis then constructs

models, logical and perhaps even mathematical representations of the...